Ep # 110 - Estate Planning Fails: Real Stories of What Can Go Wrong with Ellie Muir (Clear Estate)
Only 48% of Canadians have a will in place.
It's probably been on your to-do list for a long time and you're not alone. In fact, of the people who have a will, only 35% of them are up to date.
If you're feeling the stress of not having your estate planning in order, you are not alone! The stories shared by Ellie Muir, Team Lead of Partner Relations at Clear Estate, highlight the real-life consequences of not revisiting your estate plan and the strain it can put on family relationships. It's time to ensure your legacy is protected and your family is set up for success.
What You’ll Learn in Today’s Episode
Understand how modern families can benefit from comprehensive estate planning strategies.
Learn the importance of including digital assets in your will to protect your online legacy.
Discover the advantages of having a professional executor to manage your estate efficiently.
Explore specialized estate planning considerations for children with disabilities.
Uncover the tax implications associated with inheriting property and how to navigate them effectively.
Ideas Worth Sharing
“A will should be up to date, and that can happen throughout someone's life, where things change as you expect. People evolve over time. Every three to five years or so, typically, something has happened in your life that's worth reflecting in your estate plan.” - Ellie Muir
“You can't rely on beneficiaries to be honest and forthcoming. Inherently, people are good, right. But they're going to change their behavior slightly, especially at a stressful time when someone has passed away.” - Joseph Curry
“We want to know what all of the assets are so we can talk about the right way to bring that forward through to your estate plan. All of your debts as well. Right. Any liabilities that you have.” - Ellie Muir
Resources
Fireside Financial # 10 – Estate Planning 101
Your Retirement Planning Simplified Ep # 89 – Why Typical Isn’t Always Right in Estate Planning
Your Retirement Planning Simplified Ep # 29 – Executor Help with David Edey
Failing to Update Your Will?
4 Consequences You May Not Have Considered
1. Failing to Update Your Estate Plan Regularly
One of the biggest estate planning mistakes is not revisiting your will and other documents regularly. Life changes—such as new assets, family dynamics, or financial shifts—can significantly impact your estate plan. Take Bob and Sally, for example. They originally planned to donate $300,000 to a charity, which was 20% of their $1.5 million estate at the time. However, by the time they passed, medical expenses had reduced their estate to $500,000, making the charitable donation 60% of their total assets. Their children received far less than they had intended.
Tip: Schedule an estate plan review every 3-5 years or whenever a major life event occurs. This ensures that your estate plan stays aligned with your current financial situation and family priorities.
2. Poor Record Keeping Causes Family Conflicts
Family disputes over money are common, especially when a loved one becomes incapacitated or passes away. In May’s case, her daughter Julianne took over managing her finances when May developed dementia. While Julianne provided exceptional care, she failed to keep detailed financial records, leading to suspicions and legal battles with her siblings.
Tip: Appoint a professional executor or trustee who can maintain accurate financial records and communicate clearly with beneficiaries. This neutral third party can help prevent disputes and ensure transparency.
3. Relying on Well-Meaning but Misguided Advice
Another common mistake in estate planning is making changes based on casual advice. When Dawn passed away, Mary followed a neighbor's suggestion to name her children as sole beneficiaries of her life insurance policy. Unfortunately, this decision unintentionally disrupted a special needs trust that had been set up for her disabled daughter, leaving her without the proper care.
Tip: Always consult with estate planning professionals, such as financial advisors, lawyers, or tax experts, before making changes to your plan. Well-meaning advice from friends or family may not take into account the complexities of your unique situation.
4. Biased Decision Making by Family Members
Naming family members as trustees or executors can sometimes lead to conflicts of interest. In Joseph’s case, he set up a spousal trust for his second wife, Megan, and named his son Henry as trustee. However, Henry chose investments that prioritized preserving capital for his inheritance rather than providing for Megan, which went against Joseph’s intentions.
Tip: Consider appointing a professional trustee who is not personally invested in the estate. A neutral party can ensure that decisions are made impartially and in accordance with your wishes.
5. Regularly Update Your Will to Reflect Changes in Your Life
Estate planning isn’t a one-time event. Without regular reviews, outdated plans can lead to unintended consequences, such as unequal distribution of assets, family disputes, and tax liabilities.
Tip: Make it a habit to revisit your will and estate plan every few years to ensure it reflects any changes in your relationships, assets, or goals.
Protect Your Legacy with Professional Estate Planning Advice
Careful estate planning ensures that your legacy aligns with your wishes. By avoiding common estate planning mistakes—such as not updating your will, poor record keeping, and relying on informal advice—you can prevent family conflicts and ensure your assets are distributed according to your intentions. Consult estate planning professionals to stay on top of any legal, financial, or tax implications and ensure your estate plan remains up-to-date.
A well-maintained estate plan can help you make informed decisions, protect your family, preserve your wealth, and create a lasting legacy.